Argentina Economic Forecast

Argentina Economic Outlook

November 6, 2018

Although the economy remains mired in recession, the latest political developments and available economic data provide a glimmer of optimism. On 25 October, the lower house of Congress approved the 2019 austerity budget, and the following day the IMF formally approved the revised standby agreement. Meanwhile, financial markets seem to have welcomed the new monetary strategy, with the net demand for foreign assets moderating in September. Moreover, the contraction in economic activity softened further in August, partly due to recovering agricultural output, and in September the trade balance recorded a surplus after 20 months in the red. On the fiscal side, the primary deficit narrowed considerably in January–September. Nevertheless, with sky-high interest rates weighing on credit and rising inflation significantly hitting consumer spending, the road to recovery will be long and arduous.

Argentina Economic Growth

The economy is expected to remain in recession next year, as the fiscal adjustment and high interest rates depress public and private investment, while elevated inflation weighs on household spending. Macroeconomic imbalances, however, should narrow: Higher agricultural exports and contracting domestic demand are set to reduce the current account deficit, while tighter fiscal policies should translate into a smaller fiscal deficit. Restoring investor confidence, however, is key and an unfavorable political outcome in next year’s elections and capital flight loom over the outlook. LatinFocus Consensus Forecast analysts see the economy contracting 0.5% in 2019, down 0.4 percentage points from last month’s estimate, before rebounding to 2.7% growth in 2020.

Argentina Economy Data

20132014201520162017
Population (million)42.242.743.143.644.1
GDP per capita (USD)14,51113,13315,11112,50714,609
GDP (USD bn)614560652554644
Economic Growth (GDP, annual variation in %)2.4-2.52.7-1.82.9
Domestic Demand (annual variation in %)4.0-3.94.2-1.36.3
Consumption (annual variation in %)3.6-4.43.7-1.03.6
Investment (annual variation in %)2.3-6.83.5-4.911.3
Industrial Production (annual variation in %)0.0-1.80.4-4.61.8
Retail Sales (annual variation in %)26.737.327.326.220.8
Unemployment Rate7.17.37.18.48.4
Fiscal Balance (% of GDP)-1.9-2.4-3.9-5.9-6.0
Public Debt (% of GDP)43.544.752.653.357.1
Money (annual variation in %)25.728.928.230.426.0
Inflation Rate (CPI, annual variation in %, eop)26.638.026.941.026.1
Inflation Rate (CPI, annual variation in %)18.438.026.741.227.7
Inflation (PPI, annual variation in %)14.828.3-  -  -  
Benchmark Interest Rate (%)21.6320.3827.2519.8823.25
Stock Market (annual variation in %)88.959.136.144.977.7
Exchange Rate (vs USD)6.528.4612.9415.8618.60
Exchange Rate (vs USD, aop)32.6329.8352.8522.6017.30
Current Account (% of GDP)-2.1-1.6-2.6-2.7-4.8
Current Account Balance (USD bn)-13.0-8.9-16.8-15.0-30.8
Trade Balance (USD billion)1.53.2-3.02.1-8.5
Exports (USD billion)76.068.456.857.758.4
Imports (USD billion)74.465.259.855.666.9
Exports (annual variation in %)-5.0-9.9-17.01.71.2
Imports (annual variation in %)9.5-12.4-8.4-6.920.3
International Reserves (USD)30.631.425.638.855.1
External Debt (% of GDP)25.929.026.134.736.2

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Argentina Facts

ValueChangeDate
Bond Yield6.690.15 %Dec 17
Exchange Rate36.060.45 %Nov 15
Stock Market30,4742.26 %Nov 15

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